We here at ThirdPipe have long held the conviction that paywalls for content on small value product really are wrong unless you are providing the service as part of a larger offering. A good example would be the Apple Store iTunes as a conjunction with the Nano MP3 player. Or the paywall is a convenience factor to an already high value information source. Say Dunn and Bradstreet where all you have to do is register if you already subscribe to the service.

But to view a paywall as a new income stream? Bonkers man. Ain’t gonna fly. NYT found that out two years ago. Now NewsDay has found out the same thing –

So, three months later, how many people have signed up to pay $5 a week, or $260 a year, to get unfettered access to newsday.com?

The answer: 35 people. As in fewer than three dozen. As in a decent-sized elementary-school class.

That astoundingly low figure was revealed in a newsroom-wide meeting last week by publisher Terry Jimenez when a reporter asked how many people had signed up for the site. Mr. Jimenez didn’t know the number off the top of his head, so he asked a deputy sitting near him. He replied 35.

Now to be fair one has to consider the context of that number. NewsDay also owns the local cable franchise as well. Plus anybody who subscribes for the pulp get the online subscription free as well. So a large swath of the potentials already have access for free. But what it does show is that a paywall is a barrier unless one is linking it to something larger. There is too much free content out there to justify paying for it. Fact one concept that none of the papers yet fathomed is that they are third person before the reader gets to it. Customers are cutting out the middleman and reading the press releases directly now, removing the filter and hence the need for the paper itself!

We have said this before. If a paper wants to make a go of digital news content they need to follow an old Telco prescription. Offer the handset for ‘free’ and pay for it and your talk time as a bundle. In the papers case, you offer the Kindle II for free bundled with a 2 year subscription to the paper at $9.95 a month. Then you make sure the digital daily is on the machine everyday. Don’t require the reader to futz with a download, it has to be a push.

Its a multimillion dollar idea offered free.

Linky.

Or should I say the channel selector? You still might want to keep the cable for data transport — to get TV. –

So say you skip the Boxee Box and go with the Zino. One of the frustrations of internet TV is finding what you want, when you want it. This show is only on Hulu, that show is only on the network’s portal, and you’re on the web…what do you care which network produced what show? Can’t someone else keep track of that?

Well another launch yesterday was Clicker, a programming guide for internet TV. What’s nice about Clicker is that it only offers full episodes of content, so you won’t get dozens of hits that lead to 15 second clips. Clicker catalogs content from both free and paid sources, such as Netflix Instant Streaming and Amazon Video-on-Demand, but it marks paid content clearly so you can skip over it if you wish. You can set up Playlists, and Clicker also offers some social features, such as Trends and connecting your Clicker account to your Facebook account.

With each passing month it seems like cutting the cable cord becomes a more viable alternative, but yesterday in particular seemed to be a Big Day for internet TV (most of these launches were probably due to the NewTeeVee event that took place in San Francisco, CA). So are you ready to ditch cable? Or have you already? Please share your thoughts in the comments!

That is from IT World. Not exactly a CES oriented publication.

But the question is, is next year, THE year more users cut out the channel side of the cable connection? It could be if things remain stable as in near free. Or that Hulu does go to a paid service that’s like $20/year and includes premium offerings at that price. Sadly for the TWC and Comcast’s of the world, whether that happens or not is out of their hands.

The deep question is could Comcast survive as a data only transport provider?

Well there are discussions going on that YouTube will be offering full length pay-to-view from some of the major studios. Keep in mind that BlockBuster, NetFlix provide subscription, and we have RedBox doing the $1 thing as an impulse buy at the grocery store. So what is a Cable operator to do? –

Google Inc.’s YouTube is in discussions with major movie studios about streaming movies on a rental basis, a test of whether the online video giant can persuade its millions of users to pay for premium content.

For Hollywood, the move could represent a bold attempt to offset its dwindling DVD sales with online revenue.

YouTube is talking to Lions Gate Entertainment Corp., Sony Corp., Metro-Goldwyn-Mayer Inc. and Time Warner Inc.’s Warner Bros. about charging for new titles on the existing YouTube site. In some cases, these titles might be available on the site on the same day that they come …

Now forget for a moment the idea of ‘new’, ‘bold’, ‘innovative’. This deal is none of that. Its been done before. What is of note is the sheer size of the audience that YouTube brings to the table. That size is what is going to change the landscape somewhat. YouTube is hitting 400m visits a month. A 1% rate would yield a return that is more than all the other per play players combined.

And whither the cable cos? A YouTube deal ends up making the pay-per-view offerings from them just another also ran offering even though they pioneered the idea years ago. So what is left unique to cable? The Sopranos on HBO? If that is the case, oh man they could be hurting. There is nothing preventing the content providers like HBO, STARZ and Cinemax from also migrating over to YouTube either ala carte or as a bundle.

The cable cos should be very worried. Even with their deals with the FCC and the studio majors, the uniqueness of their packaging is just about played out. WiMax is going to make any plans for their expansion to unserved markets a moot point. Too much investment required in physical plant and right of way to be competitive in the future.

You had a nice run guys. Time to start playing the ‘how low can you go’ mamba.

Linky.

Just when free tv on the internet was starting to get good, Hulu board member Jon Miller had to go and talk about subscription fees. Miller, an AOL refugee who’s now squeezing cash out of consumers for News Corp, said last week of subscription fees: “in my opinion the answer could be yes. I don’t see why that shouldn’t happen over time… it seems to me that over time that could be a logical thing.” Charging for content isn’t his only big idea…

“I think what works for consumers most likely-and this has to be tested, frankly-is bundles,” he said. “I think you have to figure out what are the right bundles that people buy and what’s contained in that bundle. For example, you could have-and I’m making this up entirely-you could have a New York bundle, and that could consist of various papers or publications that are relevant to the audience in New York, and you could make that all, potentially, a bundle to a consumer at one price.”

This is a Suit with a one track mind. He’s talking AOL trash and we know where AOL is headed — in the dustbin. Look Hulu could do a couple of models –

• Free, supported by ads.
• subscription, for ad free content
• premium for content that is not on the free venue.

Every one of those, as a group can be utilized. Pay some of the $ to the carriers to defray the costs to them (and shut them up.) But dump the bundle idea. That is a disaster. One of the attractions of Hulu is that it is bundleless. You start looking like another cable co you will lose all attraction to the consumer as a service.

Linky.

In a round about way, yes. The deal is many cable co’s pay a fee to carry something like ESPN360 then ESPN also charges a fee to the subscriber. What’s wrong with this after the jump –

To enable consumers to have reasonable access to all web-based content and services, the Commission must prohibit content providers from mandating wholesale access fees from broadband providers at discriminatory rates, terms and conditions.
Denying access to content is not a new phenomenon. For cable operators, video programmers have long denied subscribers access to their content unless the distributor agrees to pay an access fee, dedicate bandwidth for the content, and distribute it to a set percentage of the operator’s customers. This obligates all of the operator’s customers to pay for content regardless of whether each customer wants it.
Rural customers are especially affected. The independent operators who often serve smaller markets and rural areas are often forced to pay higher fees and accept more onerous terms and conditions than larger distributors. As a result, many rural customers are either unable to access content they desire, or are forced to pay higher monthly fees than they wish.

The above is a missive from an ACA filing to the FCC on the nature of services like ESPN360 on behalf of its rural carrier members. Full PDF is here.

Here’s the problem with something like ESPN’s model. Cable Co’s typically contract with a HBO to be able to provide content on its cable channels. Another words a cable version of the network affiliate model. Along comes ESPN asking for a fee. One would assume that its the same model as we just described. Unfortunately it is not.

The ESPN service is a IP based service like Hulu. So the fee is a charge not a subscription to the cable co. What’s even odder is that ESPN won’t provide the service to an IP customer unless their carrier has paid the fee! In that kind of arrangement I can see the angst ACA has. Under those circumstances the table ought to be turned. ESPN should be PAYING a fee to offset the data traffice created by their service.

Telecom get weirder every day.

HT: Wired

Having been looking for a buyer for the ailing AOL unit, TWC has finally decided to spin the unit, er sucker, off. Considering its falling fortunes and revenues, AOL represents a $124Bn gamble that never made sense and might as well be a write off. –

“A separation will be the best outcome for both Time Warner and AOL,” Chief Executive Officer Jeffrey Bewkes said in the statement. “The separation will also provide both companies with greater operational and strategic flexibility.”

Bewkes is getting rid of AOL, which has confronted falling ad sales during the recession, to focus Time Warner on its film and cable-television businesses. AOL has dealt Time Warner a series of setbacks since the 2001 deal: shareholder lawsuits, a regulatory probe and declining sales. The parent company wasn’t able to sell or find a partner for the unit after talks last year with Google Inc., Yahoo! Inc. and Microsoft Corp.

“The obvious implication of spinning out all of AOL in one entity is that Time Warner’s efforts to sell AOL failed,” Fred Moran, a Boca Raton, Florida-based analyst at Benchmark Co., said in an interview. “Now, as a last resort, Time Warner is looking towards spinning the whole company out.”

At one time having a horizontal entity that could provide all services would seem to have made sense. But AOL was never marketed as part of a package deal, nor was AOL tool set ever leveraged to the benefit of the cable delivery unit. (eg. Cable internet uses its own portal rather than utilize AOL’s).

Fortunes fall sometime through no fault of their own. But I am afraid that the TWC-AOL deal was just a reason to be big for big’s sake. Under that guise the purchase was a fools errand. They are $124Bn poorer for it.

Linky.

The plans are canceled for bandwidth caps by TWC in the Rochester, NY service area. I presume the huff and puff of a CongressCritter probably helped, but I don’t know –

Time Warner Cable is canceling plans for a new Internet pricing plan for the Rochester area that would have billed people according to how many gigabytes they use each month, Sen. Charles Schumer announced today.
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The company had unveiled the new consumption-based pricing plan at the beginning of April, with the plan due to take effect in September.

But the reaction by Web users was overwhelmingly negative. They accused Time Warner Cable of trying to reap profits at the expense of consumers who were accustomed to flat-rate/unlimited usage service.

As the protests increased, area politicians joined in criticizing the company, and Schumer, D-N.Y., today announced the decision in front of Time Warner Cable’s local headquarters on Mt. Hope Avenue.

The moral of the story? Get a bunch of people together, start a campaign drive, call your congressman and write letters to the FCC and you just might get those spineless jerks on Mahogany Row to back off implementing caps in your area. It is the only conclusion that can be drawn from this.

Linky.

But copyright licensing gives the programmers (many of whom are vertically integrated with cable/broadband access providers) the ultimate say over who gets to (legally) put programming online. this gives the programmers considerable input into how the business model will evolve. Which is why, as Hulu explained in their blog post back in February (which I expect to disappear as soon as the Video Powers That Be realize that such a frank admission of market power seriously undercuts their stated position that the internet is the ultimate competitor to every video or audio service), Hulu decided to block access to its content by Boxee despite the fact that Hulu “realize that there is no immediate win here for users”:

Our content providers requested that we turn off access to our content via the Boxee product, and we are respecting their wishes. While we stubbornly believe in this brave new world of media convergence — bumps and all — we are also steadfast in our belief that the best way to achieve our ambitious, never-ending mission of making media easier for users is to work hand in hand with content owners. Without their content, none of what Hulu does would be possible, including providing you content via Hulu.com and our many distribution partner websites.

In other words, Cuban is right when he points out to the CEO of Boxee that programmers aren’t stupid, so anyone wanting to distribute programming needs to stop thinking about the supposed inevitable march of technology and start trying to cut some deals that keep the current players happy. Mind you, this does not mean that video will disappear from the internet. You will still get to see all the dramatic chipmunks and other video clips you desire. But, if this goes on, it seems unlikely that internet distribution will become a competitor to cable or other MVPDs.

With that Feld points out that the carriers still have sufficient clout to knock off advancing services from MythTV and Boxee. Both being the equivalent of Open Source STB’s that can store video content. [That a smart carrier might embrace one of these projects to enhance their bottom line is an offer for a different post.] But it does point out that regardless of technology’s march, the presence of copyright law and licensing agreements can stand in the way of its use.

Now here is the odd ball question I wish to pose. Do the likes of the MPAA really care where the money comes from? So long as they get paid? I would think not. Not only that but the likes of Sony and Time Warner have rumbled in the past that they might market their own TVoIP channels. Another words by pass of the cable cos. So I see no reason that the MPAA could not come up with a annual subscription to content for $100/yr and the api to support it.

The cable companies would scream bloody murder of course. But it is as a legitimate contractual agreement as those between the cable cos and the production houses. Its just Thomas Friedman’s Earth is Flat model. Will it happen? Not in the short term. And if it does, maybe not with the major production houses but the indies. But sometimes you need to show the elephant that there is another source of water before they are willing to change watering holes.

Linky.

As much as I have differing views with Harold Feld over at WetMachine, he posts an entry over there that is not only common sense but begs the question do the back office programming directors know what they are doing?? —

At first, it seemed from this write up, that Comcast had deals with various cable network operators to be the exclusive provider of their content online. If you don’t subscribe to Comcast, too bad for you. That would, however, exclude telcos like Verizon, overbuilders like RCN, and DBS providers like DISH and DIRECTV. Given that plan, it would appear to be a tit-for-tat against Verizon, leveraging the superior market power of cable operators on the upstream programming market.

But this further report suggests something else. In this Ad Age article, quotes Time Warner CEO Jeffery Bewkes explaining the new intiative, dubbed “TV Anywhere,” as follows: “If you want to watch your favorite TV network or shows through broadband on any device — PCs or mobile — you can do it as long as you subscribe to any multichannel provider.” The fact that DIRECTV is cool with the plan would indicate that they see this as a way to leverage their content (John Malone owns both DIRECTV and Liberty Media) without requiring a subscription to their cable rivals. The lack of any backlash from the usual suspects in the MVPD world that could stand to lose under the way Comcast described this initially as exclusive to cable, e.g., telcos and overbuilders, would also seem to indicate that it is a strategy driven by content producers and a general effort to keep the availability of content online from trheateneing the existing MVPD model, as some have feared. (Mind you, I expect cable and broadcasters to continue to protest that “the internet” makes opwnership limits obsolete, even as they lock up content and tie it to MVPD subscriptions, but that is how it goes.)

A what if, and I have not run the numbers. Say a cable operator just said to hell with it. I am a pipe provider mostly. I will develop a simple front end that does 2 things.

A) If a customer wants a portal front end for all their mail, etc they can contract with a list of providers. I get a percentage.
B) The second piece of the front end would allow customers to pick and choose the channels they wish to see. The content providers if they want to provide discounts for subscribing to X number of channels I will pass that along as well as an option. I get a percentage.

On the backend my systems open up the available channels and the billing reflects that accordingly. I fire all the channel partner staff, the IT programming portal staff, etc. Not only that but I gain another way, the model scales nationwide with little additional effort. If I wanted to get fancy offer the same thing on the data side.

Read the whole article here.

To keep their broadband customers from fleeing to rival phone companies, New Jersey cable operators are trying a new perk: free WiFi.

Comcast is testing WiFi service at about 120 NJ Transit rail stations, targeting its high-speed internet subscribers who commute. The trial — which quietly began last month — is for existing customers only and is designed to gauge user interest, spokeswoman Mary Nell Westbrook said, adding that no formal announcement of the service has been made.

The move shadows Cablevision Systems’ Optimum WiFi program, which was launched throughout the tri-state area last fall. The two companies are collaborating to extend the reach of their wireless networks, enabling Comcast customers to access their operator’s WiFi at train stations in Cablevision territory and vice versa.

Rail stations with free WiFi include those along the Northeast Corridor, Morris, Essex, Montclair-Boonton, Main-Bergen County, the North Jersey Coast, Pascack Valley and Raritan Valley lines. Coverage areas at each station include platforms and parking lots, but do not extend to the trains, Westbrook said. Users can connect using their comcast.net usernames and passwords, and can surf at speeds of 1.5 Megabits per second.

To be honest this is merely a match to WiFi tie-ins that both Verizon and AT&T offer their customers. But it is a faint recognition that in certain markets there are choices for consumers and when those choices start being made ISP’s need to adjust to compete.

Too bad that all that stimulus money for the telecom industry will end up in Verizon and AT&T’s hands. We might have fostered even more competition had there been some recognition of growth for smaller operators.

Linky.